Medical testing kit manufacturer Immunodiagnostic Systems (IDH:AIM) expects to miss revenue expectations by 15% this year.
The Tyne & Wear-based company has plummeted 19.5% to 382.5p following the revision (15 Sept), but this has not created a buying opportunity given the potential for this set-back to knock a long-term growth strategy off course.
Immunodiagnostic, which makes manual and automated diagnostic testing kits (immunoassays) for the research and clinical markets, expects turnover for the year to April to fall between £45 million to £47 million, hit by increasing competition and exchange rate movements.
As a result earnings before interest and tax (EBIT) are forecast to fall 37% and 36% in the next two years to £5.6 million and £6.1 million, respectively, according to Canaccord Genuity. Its analysts believe Immunodiagnostic will not return to growth until 2017 when new products gain traction in the market.
The change to its figures comes three months after it outlined a strategy to double revenues within five years through installing 1,000 IDS-iSYS testing devices (June 24). To achieve this Immunodiagnostic would have to sell three times as many machines in each of the next five years than it did in 2013. However, the company remains committed to the strategy despite such an early set-back, believing it can hit its targets with the help of a few acquisitions. An increased focus on mergers and acquisitions would arguably increase the risk profile of the business.